Hey Lee,
Error 0x800f0983 is a real pain, especially when it’s happening across multiple servers. I would like to push a few things for check - first this error usually pops up when there’s a mismatch or corruption in the component store (that’s where Windows keeps all its update bits and bobs). Since you’ve already tried the usual fixes (DISM, SFC, etc......) let’s think outside the box a bit check your disk space azzure vm's can sometimes run out of space during updates, especially if the OS disk is small. Make sure you’ve got at least 20gigs free. If not, resize the disk in azure it’s like giving your server a bigger lunchbox. So, next component store cleanup run DISM /Image:C:\ /Cleanup-Image /StartComponentCleanup
to clear out any junk in the component store. Think of it as taking out the trash before a big party.
Manual update installation part (sometimes we need to do something by our hands lol) download the standalone update package from the MSFT update catalog and install it manually. u know sometimes windows update service just needs a nudge.
Inplace upgrade greyed out this usually happens if the os is too far gone or there’s a compatibility issue. Since you’re on 21h2, try downloading the 2022 iso directly from Microsoft, mount it, and run setup.exe from there. If it’s still greyed out, it might be time to back up your data and consider a fresh install. I know, not ideal, but sometimes you’ve got to burn the house down to get rid of the spiders :) check your vm agent and extensions in azure. they can interfere with updates. Also, make sure your vm isn’t running out of cpu or memory during the update process azure vm's can be a bit dramatic under pressure.
Lastly, if all else fails, open a support case with azure. They’ve got some serious tools to dig into these issues, and it’s always nice to have someone else share the blame if things go sideways, really they would help so. Hang in there, dude. Updates are like IT’s version of a soap opera dramatic, unpredictable, and you’re never quite sure how it’ll end.
rgds,
alex